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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15191 / December 23, 1996
SECURITIES AND EXCHANGE COMMISSION v. KEYPOINT FINANCIAL
CORPORATION and MICHAEL R. WARREN, Civil Action No. 95-6542 KN
(Ex) (C.D. Cal.)
The United States Attorney's Office for the Central District
of California and the Securities and Exchange Commission
("Commission") announced that on December 4, 1996, Michael R.
Warren ("Warren") pled guilty to a five count criminal
information, including two felony counts under the Investment
Advisers Act, two felony counts of wire fraud, and one felony
count of mail fraud. Warren is scheduled to be sentenced by the
Honorable Stephen V. Wilson, United States District Judge for the
Central District of California, on February 10, 1996. In a
related case, on May 13, 1996, the Honorable David V. Kenyon,
United States District Judge for the Central District of
California, entered a Final Judgment which provided that Keypoint
Financial Corporation ("Keypoint") and Warren jointly and
severally pay $628,107.23 in disgorgement and $216,681.77 in
prejudgment interest thereon. On October 31, 1995, the Court
entered a Judgment of Permanent Injunction and Other Relief
Against Defendants Keypoint Financial Corporation and Michael R.
Warren ("Judgment of Permanent Injunction"), which enjoined
Keypoint and Warren from violations of the antifraud and the
books and records provisions of the federal securities laws.
Keypoint and Warren consented to the Judgment of Permanent
Injunction without admitting or denying the allegations in the
complaint.
The Commission's complaint alleges that from approximately
January 1991 through at least December 1992, Keypoint and Warren
fraudulently offered and sold non-existent insurance annuity
contracts and limited partnership units to Keypoint's clients.
The Complaint alleges that Warren and Keypoint misappropriated
client funds for the benefit of themselves or their affiliated
businesses. Finally, the Complaint alleges that when Commission
representatives attempted to examine and inspect Keypoint's books
and records relating to its advisory business, Warren failed to
respond or to produce such documents to the Commission, as
required by statute.
In a related administrative proceeding, the Commission
issued an Order on November 6, 1995, whereby Keypoint and Warren,
without admitting or denying the Commission's findings, consented
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to an Order revoking Keypoint's registration with the Commission
as an investment adviser and barring Warren from association with
any broker, dealer, municipal securities dealer, investment
adviser or investment company.